TaxTMI 
TaxTMI 
2023 (9) TMI 203
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.... affidavit of even date by Sri. B. R. Ajit, it's Managing Director. It is averred therein that the appellant- company was unaware of the impugned order having been passed on 24.8.2020. The period was covered by the Covid-19 pandemic, when the State of Kerala was facing severe crises in terms of lockdowns and dislocation of services. The assessee was also operating with skeletal staff. It was only on 24.8.2022 that the appellant- company was telephonically informed of the impugned order by the office of the concerned Assessing Officer (AO). Immediate steps for redressal were taken by contacting the CA, the ld. counsel before the first appellate authority, and the appeal, engaging another counsel, filed on 02.9.2022. The said facts, which, to the extent they relate to Covid-19, are borne out by common knowledge, are not disputed by the Revenue. In fact, the bulk of the period of delay is covered by the blanket saving by the Hon'ble Apex Court per its suo motu petition in Cognizance For Extension of Limitation (in MA No. 21 of 2022, dated 10/1/2022). We under the circumstances find merit in the assessee's case and, accordingly, condone the delay, and admit the appeal. Ajit Asso....
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...., business income. The assessee's alternative claim of being allowed the cost of improvement as a business deduction also could not be allowed in the absence of any supporting vouchers being furnished by the assessee, who had failed to produce the books of account, mandatory for their maintenance and audit, both under the Act and the Companies Act. The share of ERF (Rs. 2,18,49,600) was, accordingly, assessed as business income. The assessee failing to improve it's case before it, the same was confirmed in appeal, for the same reasons, by the first appellate authority, who, though, allowed it credit for expenditure at 20% of the claimed sum of Rs. 434.35 lacs, reducing the income, assessed as of business, by that sum (Rs. 86.87 lacs). Aggrieved, the assessee is in second appeal. Good Homes Private Limited (GHPL) 4. The facts of the case are broadly similar, except that it required several notices u/s. 142(1) by the AO, as indeed u/s. 144 on 06.11.2013, and then again on 04.12.2013, for the assessee to file it's return of income, which it did on 25.3.2014, returning nil income. Needles to add, no books of account or supporting documents evidencing the expenditure claimed qua c....
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....o be taken to discharge old loans as well as service the interest thereon, causing major crises, with the threat of attachment from the creditors looming large. Distress sales, as to AWHO (Army Welfare Housing Organization) for sale of 426 cents of land in 1991, at Rs. 10,000 per cent, as against the market price / circle rate of Rs. 25,000 per cent, were made. ICDS, which had underwritten the loan from Syndicate Bank, attached the property (except to the extent given to HUDCO) in 1993-1994. That is, the sale of property during this period was made only for survival, and for clearing loan and interest dues. The period post 2005, which may be regarded as the second phase, provided the promoters an excellent opportunity to sell the property due to increased demand for real estate. New opportunities to purchase land also arose. As buying land in old (promoter) companies (PCs) would lead to their immediate attachment in view of their default status, three new companies (NCs) (i.e., Capvest Wealth Services Private Limited, Jeeva Vacations Private Limited and Elton Web Sales Private Limited), were promoted by the majority of the original promoters, purchasing land to the extent of 152 ce....
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....sessee. The sale amount is, again, undisputed. The only error, however, committed by him, and not rectified by the first appellate authority, is in dividing the aggregate cost (i.e., development and other costs) of Rs. 36,56,89,780, to arrive at the per unit cost, by 896.76 cents, i.e., the total land purchased, instead of 624.533 cents, being the saleable area, i.e., the land available for sale (part of which stands sold during the year), on deducting from the land purchased, that utilized for providing open area, lawns, internal roads, landscapes, loss of land due to litigation and attachment by FIs, etc. This was clearly an error on his part as, without doubt, while cost is incurred with reference to the total land area available, in computing the cost of the land sold or, where unsold, held in stock as at the year-end, the cost would be allocated to the land available for being sold. Reference was made by him to the following tabular chart forming part of the paper-book: (PB-1, pages 2, 3) Table A Sl. No. Particulars Extent of land (in cents) Total value (in Rs.) Value of the land (per cent) (in Rs.) 1. ....
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....nd when a deal in its respect came to be finalized. The lands acquired by different entities were, thus, not contiguous, but spread over the entire area of nearly 9 acres. The project envisaged and being developed was over this area. Some entities would thus stand to 'loose' more of their land to the common areas, viz., open area, roads, lawns, etc., making variable the proportion of land purchased by them available for sale. A company with a larger proportion of it's land available for sale would stand to gain more from the common development, and the concomitant cost sharing arrangement, more than the one with a lower proportion in comparison, which could even result in a loss, as is indeed the case, and toward which he would refer to a chart (Table B, at PB-1, pg. 13). Thirdly, the sale price of land would also vary significantly, even as the development cost, due to its aggregation, becomes uniform, resulting in a distortion. This is as the land located in the vicinity of an open area or adjacent to the main road normally fetches a higher rate than the other. On being queried that the purchase rates of lands by different entities would also be correspondingly different, he expl....
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....it for each company from the sale of land during the year (in Rs.) Profit in the name of each company as per the sale deed without making intercompany adjustments (in Rs.) Loss in the name of each company as per the sale deed without making intercompany adjustments Excess profit to be transferred to the other companies to compensate for the loss (in Rs.) Loss to be compensated by other companies to ensure that the average profit is earned by each company (in Rs.) 1. Good Homes Pvt.Ltd. 174.56 12,280.84 21,43,744 1,72,13,435 -- 1,50,69,692 -- 2. Beaver Estates Pvt.Ltd. 224.6 12,280.84 27,58,277 1,21,58,910 -- 94,00,633 -- 3. Mr.BR Ajit 37.6 12,280.84 4,61,760 23,91,023 -- 19,29,263 -- 4. Capvest Wealth Management Services Pvt.Ltd. 100.5 12,280.84 12,34,225 -- 1,50,42,408 -- 1,62,76,633 5. Elton Technologies Pvt.Ltd. 48.5 12,280.84 5,95,621 -- 1,22,33,746 -- 1,28,29,367 ....
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....in its respect, however, stand taken in the appeal memo, which, being not withdrawn, explains, despite being not argued, our adverting thereto. A mere glance at the nature of work undertaken, cost of which stands claimed at Rs. 14 crore as per the assessee's (GHPL) letter dated 04.12.2013, is sufficient to convince one of the assessee's claim as being wholly without merit. The same is toward development of an Island, entailing, inter alia, reclaiming land, connecting it with the main land by a bridge, providing necessary facilities, as roads, water, electricity, besides common infrastructure facilities, seeking approval from the Government of Kerala; in sum, to develop the Island as per it's Master Plan. In fact, the entire project, as also informed by Sri GK during hearing, is the brain child of Sri BRA, an architect of national repute, on whom several accolades and awards stand bestowed upon in his long and illustrious career for unique/creative buildings/structures. The Island was to be the first such, albeit private, property in the country, a mini township so to speak, comprising a gated residential complex, villas, clubhouse, resorts, lawns, etc. spread over the area. The str....
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.... that AAPL was not a part of the AOP, or does not consider it as so? Needless to add, such issues arise only as there has been no delineation of the contribution by each of the members of the so-called AOP nor, resultantly, any sharing of profits or, as the case may be, losses arising from the stated joint venture. The returns in the two cases before us are under the head 'capital gains', as we understand it to be for other companies, claiming capital loss. How could then, we wonder, the assessee claim it to be not his income if it is assessable, instead, as a business income? The income, it stands to reason, would, respective of the head under which it is assessable, continue to be of the assessee only. There is, in fact, no claim, while returning capital gains, of the land development being undertaken, to whatever extent, by another/s, or jointly. The same is relevant as it is only the cost actually incurred that could be claimed toward the cost of improvement. Even in case of joint development, inasmuch as costs are shared jointly, and each entitled to sale proceeds of their separate land holdings, arises to them separately. It is only a cost sharing arrangement, whereby each is....
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....iness reason and management of work (refer para 3). The same are vastly different in character, i.e., in terms of the functional expertise and capabilities required therefor, with no correlation, or possibly so, with the extent of land owned by the respective companies, w.r.t. which the profit on the project (of land development) is stated would be divided, and which, rather, is admitted to be a device to beat the land ceiling. AAPL, for instance, constructing Villas on the land provided by BRA, with the two sharing the sale proceeds thereof, i.e., a joint venture between these two, is understandable, of which there is though nothing to suggest, nor even a contention, much less evidence. On the contrary, as afore-noted, AAPL stands charged ERF, suggesting, if anything, the entities transacting with each other on an arm's length basis. The 3 new companies were formed much later, while the bulk of the development was in the initial years. As it appears, therefore, the permission for land development for the entire area of 9 acres (see Table A) stands moved by one company as the lead company, in which case, the other companies, which get involved for extraneous or ancillary reasons....
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.... by the other companies is only to circumvent the limitation of ceiling, with development costs being paid by them to these developer companies by way of ERF, which thus assumes the nature of a development charge (DC) or fee. This gets endorsed by the returns filed by the individual companies for the relevant year, i.e., inclusive of ERF, claiming it as an expense for the company purchasing land, and income -which is offset against development expenditure, for the developer company, i.e., the payer and the payee respectively. That apart, all the companies selling land have returned the gain as their income, implying it being sold in one's own right, as under: Table D Sl. No. Name of the company PAN Extent of land purchased (in cents) Extent of land sold (in cents) Surplus from sale of land Income assessed (in Rs.) Income offered for assessment (in Rs.) Easement rights charges Other income disallowances made in the assessment order. Total income assessed 1. Good Homes Pvt. Ltd. AABCG0444L 343 174.56 4,77,70,288 2,05,20,000 -- 6,82,90,288 -- 2. Beaver Estates Pvt. Ltd. AADCB0193M 318 ....
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...." It was further provided that "The road shall be used only for transportation of people and to transport goods as permitted by the three companies. If at all the property through which the road passes through is to be sold to an outsider to the parties to this agreement, it shall be done only with prior consent of all the parties to this agreement. Even then no right over the road shall be transferred to any outsider. It shall remain with the Original title holders. The buyer of the land shall have only the using right over the road." (emphasis, ours) As explained during hearing, as afore-noted (para 3), as indeed in the assessment order, the same is charged from all persons (i.e., other than the parties to the Agreement) purchasing land at the Island, being toward providing access thereto by using common facilities, including internal roads, and which, irrespective of which entity sells the property, is shared by the PCs in the ratio in which the lands through which the roads (or other common facilities) are built and, thus, consumed in the process, and which is in the ratio of 45:35:20 in favour of GHPL, BEPL and AAPL. This is as the said companies have foregone their l....
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....company contributing less (A) shall be liable to compensate the other two for their excess contribution, i.e., 10% and 20%, by B & C respectively, in the ratio of their excess contribution, i.e., 1:2. Rather, as we would think, the company/s contributing lower than the average ratio to the common area, which in the instant case works to 12.29% (109.81 cents / 893.76 cents - see Table A at para 5), would compensate those having contributed higher than the average ratio. This only would ensure an equitable distribution of the common area load, also fixing a suitable price therefor, which would correspond to the per unit development cost, if not also a reasonable margin thereon inasmuch as the excess land available to the lower contributing company would stand to be realized by it at the market rate, i.e., inclusive of a margin over cost. Why, a company contributing it's entire land to the development work (say), a possibility inasmuch as the same depends on the requirements of the project layout, would not stand to gain anything if the compensation is pegged only at cost, even as it's contribution for the project cannot be denied; it having, rather, contributed it's entire land for t....
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.... Total 109.81 That is, the contribution of land to the common areas (109.81 cents/ Table A), is not by the 3 PCs, as referred to in cl. 1 of the Agreement dated 17/4/2001, and, in fact, involves a different set of companies, including the NCs! The question of ERF being to the 3 PCs in the stated ratio, and as actually allowed, does not arise! Further still, how does ERF arise to AAPL, returned by it at Rs. 2,18,49,600 and, from whom? This is as it admittedly owns no land, as clarified per the assessment order of GHPL and, in fact, admitted by the assessee, for which reference be made to paras 4.3 (pgs. 18-19) & 4.17 (pg. 25) thereof, so that the further question of the same having been utilized for common area does not arise? Again, the quantum (Rs. 218.50 lacs) thereof, reckoned at 20% of the total ERF, which stands to arise to BRA instead, which though reports it at Rs. 91.20 lacs. The charge of ERF, besides being against the theory of joint venture and, thus, AOP, the manner of its allowance is de hors and inconsistent with the provisions of the agreement dated 17.4.2001, to which the said charge ostensibly owes it origin. No wonder the same is not part of ....
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....se and, rather, inconceivable as the companies are being promoted by the same set of people, with BRA being the central figure behind the project. This explains the concept of 'consent' by the developing entities, and is expected even in case the entities involved were not related. A road, after all, would be built only after laying the underground pipe for water, sewerage, and preferably also electricity and internet cable. That is, the individual companies involved in development, would have to necessarily work in tandem, i.e., in coordination, a prerequisite, and does not call for charge of ERF by one company to another. That is, the levy cannot ensure the said coordination, vital for the development, and is thus not consistent with the stated object of smooth conduct of operations. Further, the 'consent', though, indicates of it being not a case of an AOP as no separate consents in that case would be required. We next proceed on the basis of ERF, borne out of conduct, being indeed a charge contemplated by the Agreement dated 17/4/2001. This is as land contribution for the common areas and, further, differentially by the PCs, is surely a valid basis for ERF, even as the same ....
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....ationale spelt out for the ERF, i.e., to compensate one for the land committed to the common area, which could only be between the contributing companies inter se, is neither substantiated nor indeed borne out. The same, as it appears, then, is perhaps a device to either equalize profit, as discussed at para 6.2, or even to save stamp duty that would otherwise be attracted on the sale of land by one to another. There is, however, no concept of equalization of profit in accounts, the purport of which is to arrive at the correct income of the reporting enterprise, and which is also so of the Act, i.e., to bring the real income, subject to the provisions of the Act, to tax (Poona Electricity Supply Co. Ltd. v. CIT [1965] 57 ITR 521 (SC); Southern Technologies Ltd. v. Jt. CIT [2010] 320 ITR 577 (SC)), and it incidentally also explains the credence by the Act to the well accepted norms and principles of commercial accounting (Challappalli Sugars Ltd. v. CIT [1975] 98 ITR 167 (SC)). As afore-stated, it is only when one gains, i.e., in economic terms, at the expense of another, that a charge on some suitable parameter, from one to another, subject to an agreement in its respect - for inco....
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....er, which cannot be. Why, Sri.GK himself, despite the assessee-appellant's returning income, which includes loss, based on their operative data, would canvass for a uniform profit across all entities upon ignoring ERF, implying it being a profit equalization 'charge'. That apart, it is well-settled, that it is the correct legal position that is relevant, and not the view that the parties may take of their rights in the matter: CIT v. C. Parakh & Co. (India) Ltd. [1956] 29 ITR 661 (SC); Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC). The assessee's pleadings qua profit equalization, which we regard as the second preliminary issue, are for the same reason, to no avail. A concomitant question is if the grant of easement rights to the buyer/(s) of land by way of a separate agreement, or otherwise forms part of the purchase deed, in either case, specifying its nature, as well as the amount charged in its respect. The third preliminary issue is the identity of the PCs. This is as while AAPL returns income inclusive of ERF, stated to accrue to it at 20% of the total (see para 3), i.e., at Rs. 2,18,49,600, it is, in the case of GHPL, the second appellant before us, held b....
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.... and has necessarily to be on the basis of actual cost of the land sold. Two, unless shown to be wholly and totally undeveloped, would require reduction of proportionate development cost as well. Besides being highly improbable inasmuch as the said time extends upto 1996, with bulk of the land acquisition having been completed in 1983, major works like reclamation of land and bridge connecting the mainland with the Island, were completed much prior thereto. To ease the tedium involved in working the proportionate development cost; we being conscious that no books of account have been maintained, the development cost can be tabulated (financial) year-wise, and the cost up to the year prior to the previous year of the sale or, better still, in addition, 50% of the cost incurred during the said financial year, can be regarded as the development cost in relation to the land sold during a particular financial (previous) year. That apart, i.e., exclusion of the actual cost of the land sold, computing it by including the cost of its development, we observe that 426 cents of land, on which 285 residential units were to be constructed, is stated to be sold to AWHO in 1991, while the total l....
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....e year of accrual, subject of course, to other provisions, as sec. 43B.The same cannot, though, be claimed as part of the cost of land development. C. Interest Cost: A substantial part of the cost of development is comprised of interest cost, i.e., on loans contracted for the purpose of land development. The AO, as apparent from para 4.5-4.11 of the assessment order (GHPL), vetted the figures returned by the assessee, so that the quantum of costs involved in its respect stand crystallized. However, the assessee has aggregated the entire borrowing cost since inception without reference to the following, deemed pertinent in the matter: a). whether the same represents the normative cost of the project, or not; b). whether it is interest on borrowing per se, or interest on interest; c). whether the same, where in respect of loans from banks/FIs, stands paid or not; d). where the provision of s. 194A, where applicable, is met or not. It may be relevant to dilate on the matter. Accounting Standard (AS) 2 on 'Valuation of Inventories', issued by ICAI, the premier statutory body regulating the profession of accountancy in India, clarifies that the ....
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....nsion of work, which could be for several reasons, including non-availability of materials or other factor of production, or even funds, would have to be excluded. Interest cost on a stalled project does not add value thereto and, thus, is to be excluded, even as the same, being an incident of business, is liable to be claimed as a business expense for the relevant period. Even as, thus, a time cost, which therefore stands to be incurred regardless of whether the purpose for which the borrowing is assumed is actually used there-for during the relevant year, or the work actually carried on, so as to be regarded as part of the cost incurred to bring about the necessary changes, in progression toward that sought, it, where so, could be regarded as a part of the cost of production/development. Credence, thus, is given to time as the third dimension for actualization of the process of production/development, which forms the basis of inclusion of interest cost. AS-16, i.e., the AS on Borrowing Costs, specifically concerns this aspect. Some principles, delineated therein, deemed relevant, are reproduced as under: Definitions 3. The following terms are used in this Standard with t....
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....velopment is interrupted. Cessation of Capitalization 19. Capitalization of borrowing costs should cease when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. 21. When the construction of a qualifying asset is completed in parts and a completed part is capable of being used while construction continues for the other parts, capitalization of borrowing costs in relation to a part should cease when substantially all the activities necessary to prepare that part for its intended use or sale are complete. (emphasis, ours) To put things in context, if work on the bridge, an identifiable part of the project, is complete, or substantially so, capitalization of interest cost would cease. Reference to AS-16, being dedicated to borrowing cost, is made for another purpose as well. It may well be argued that to a construction project AS-7 (construction contracts), and not AS-2, applies. Though we do not set much store to this, sufficient to say that interest cost even as per this Standard is subject to the same governing principle of being recognized as an expense of the project to which it relates, and is carried ....
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....rs, witnessing cessation of work, which in turn entailed litigation costs as well as distress sales to close liabilities, including interest. No wonder, Phase-I continued for 27 years. It is, again, only understandable that stock held, upon completion of work, awaiting a 'correct' time in terms of sale value, for its realization, is, again, only a period (holding) cost and, thus, is to be expensed for the period to which it relates. There is no question of interest cost being capitalized, i.e., being carried over as a part of the project cost, from year to year. That is, except for the interest cost that arises on the application of loan for meeting the project cost, for which the work is being actually carried out. As it appears to us, different loans have been taken by different companies, firstly, for the purchase of land and, two, for carrying out specific work thereon, i.e., qua a definite part or segment thereof, viz., building bridge, land reclamation, laying pipes, construction of roads, parks, etc. And which, where representing acontinuum, some time lag between these works could be reasonably ignored, i.e., adopting a practical stance, in consonance with the ground reality....
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....erest cost which is being loaded to the project cost, while the project is to be capitalized at a capitalization rate. The said rate, as the reading of AS-16 would show, is the average borrowing rate for the different borrowings made for the project. Inasmuch as different loans are assumed at different times, and which may be at varying rates of interest and terms, the actual interest cost, on which there can be no quantitative prescription, i.e., once the purpose of the borrowing is the project, and for which it is actually applied, as incurred, would qualify for being included in the project cost, subject to the condition/s herein before stated. Further, we may, before proceeding further, also clarify that the allowance of interest on a loan from Banks/FIs, is w.e.f. 01.04.1989, i.e., fy 1988-89 on wards, subject to s.43B(d), so that it is, irrespective of the method of accounting followed, which for a company is statutorily mandated as accrual, is deductible only for the year in which the interest is actually paid. The interest, whether qualifying as a part of project or not, is to be therefore allowed only on its payment, i.e., for FY 1988- 89 onwards. A detailed working in ....
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....x, i.e., assessable under the Act, a public law, and which is also the purport of the appellate proceedings (NTPC Ltd. v. CIT [1998] 229 ITR 383 (SC)). In fact, even ignoring the assessee's first claim of Rs. 48.35 cr., i.e., vide letter dated 04.12.2013, the revised figures, i.e., per letters dated 31/1/2014 and 25/3/2014, exhibit wide variations, which need to be validated. The same is also important from the stand point of financing, i.e., how the same has been financed, inasmuch as it is an indicator of both, the time of incurring expense and its extent, particularly in the absence of accounts. Thirdly, the same are vastly different and, therefore, need to be explained. An expenditure, it may be appreciated, cannot be allowed on the basis of a statement, and has to be supported by some material, even if corroborative. The basis on which the same has been claimed has not been stated, more so in view of its constant revision. E. General, Administrative and Maintenance Expenditure. Being in the nature of an administrative overhead expenditure, so that it would be largely uniform across years, what, one wonders, explains the incurring of expenditure in the sum claimed for one....
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....pense in assessment of the payer, all of which though, without any finding! In Sum 7. The several issues attending the appeals have been discussed, highlighting the relevance and the need for being addressed in arriving at the correct income chargeable to tax for the current year (AY 2007-08). The claims made, i.e., qua capital gains; ERF; AOP, are not sustainable in law; rather, mutually contradictory. In fact, as would be apparent, as indeed admitted during hearing, the claims qua the latter two were made only with a view to enable a reasonable assessment of income. We agree in principle; it being only the real income that is, subject to the provisions of law, to be brought to tax. This is precisely, as would be presently seen, what we have attempted to. There is no gainsaying, however, that the claims, to be acceptable, are to be valid in law and, further, conform to process known to law. Why, even income assessed in the hands of another, much less returned, is nevertheless liable to be assessed in the hands of the right person. The AO cannot, without issuing a finding as to the person to whom the income in reality belongs, and which can only be on the basis of material in hi....
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....their functional roles, agreeing to share the resultant profit in a predefined ratio, of which there is no contention, much less evidence. Land ownership, or extent thereof, cannot be, as suggested, a basis for division of profits in such a case, which has necessarily to be on the basis of the pooling of efforts, including resources. Yes, land could be thrown in the common hotchpotch, forming a separate vehicle for the purpose. On the contrary, easement right fee is charged by the companies to each other, defeating the very concept of AOP, which would be so even if ERF is limited to consent only. It is, as afore-noted, only a subsisting arrangement that can be taken cognizance of and given effect to, while we find it to be canvassed only in the appellate proceedings de hors the material on record as well as the conduct of the parties, perhaps for the reason that it is perceived more beneficial in view of netting of the income and loss that otherwise stands to arise across different companies. The claim of AOP fails for another, fundamental reason. That is, it does not arise as an issue in the instant proceedings. Returns stand filed by the appellant before us, as indeed by other....
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....of the profits/losses, as was found in Malibu Estate (supra). The assessee's claim qua ERF, which militates against the concept of AOP, is equally fraught. Its economic rationale, which only would justify it, remains elusive even after examining it from all angles. It speaks of consent, and not charge, much less of how it is arrived at. It is not, as presumed by us, a development fee levied by the companies undertaking development work from those who bought developed land later, in some defined ratio, in which case it would find mention in the purchase deed and, in fact, is not required to be so charged as it would get factored automatically in the land price - which is only on account of it being developed, and which also takes into account the locational advantage of any piece of land, i.e., the second reason stated for its charge. Rather, so construed, whatever the nomenclature of the charge, it would stand to be realized from all the buyers, and not the group companies alone. And which in fact suggests it to be a mechanism to save on stamp duty, i.e., where the land is being transacted amongst the group companies, rationale of which, again, has not been explained. And, r....
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....d income for the payer and payee (enterprise) respectively. In fact, in either case, i.e., arising as a cost or as a credit, it would stand to be appropriated toward the cost of land. In fact, adjustment to this effect would also prevent the distortion of the operating statement of the relevant companies and, rather, it is the not making of the adjustment in its respect that would tantamount to a transfer of profit/loss by one company to another. It is, as afore-said, only when one gains at the expense of the other that a charge by the latter in its respect is called for, validating the same, irrespective of the name ascribed to it. That is, cannot survive if it is without an economic rationale, as is being now contended by the assessees before us, seeking it being disregarded in an attempt to equalize profit, for which, on the contrary, all that is required is to compute the aggregate cost, neutralizing it by applying it across different entities. That is, it does not, particularly in the absence of accounts, require either a charge of ERF, or being assessed as an AOP. Continuing further, i.e., qua the computational issues, the development cost, of which there is in fact no rec....
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.... unfeasible in the absence of any record; there being no claim in its respect. In fact, given a profile of the area contributed, categorizing it as A, B and C (say) in terms of locational advantage of the balance land (other than common), weights could be assigned thereto, and inter-company adjustment made, or directed to be, toward the second distortion for which ERF was reportedly conceived. There is, however, nothing on record qua the said disadvantage - which could be easily demonstrated in terms of differential sale value, for us to direct so; the entire case being based on bald statements, with there being nothing to even show of the entire area of 896 cents forming part of a single, composite area. In fact, as we see it, there being no evidence of any actual sharing of profits/losses, with, rather, the companies raising charge of ERF on each other, the claim in its respect, as indeed qua AOP, is guided principally by the motive to; the claim of capital gains failing, arrive at a reasonable estimate of profit/loss for each of the entities. Needless to add, the cost as arrived at shall be constant across all the entities, who shall therefore, should they so desire, be allow....